The tax year for 2020/21 has already begun from April 6th, 2020. New tax rates and thresholds are out and amid the Coronavirus outbreak, personal finances can be affected by the new tax rates introduced by the government. Here’s everything individuals need to know about the new tax rates:
New Tax Rates and Thresholds 2020/2021 for Employees
Income Tax that is deducted from the employee’s salary depending on their tax code and their taxable income above their Personal Allowance which is as follows:
England and Northern Ireland
| Employee Personal Allowance |
|
|---|---|
| Basic tax rate | 20% on annual earnings above the PAYE tax threshold and up to £37,500 |
| Higher tax rate | 40% on annual earnings from £37,501 to £150,000 |
EScotland
| Employee Personal Allowance |
|
|---|---|
| Scottish starter tax rate | 19% on annual earnings above the Personal allowance tax threshold and up to £14,585 |
| Scottish basic tax rate | 20% on annual earnings from £14,586 to £25,158 |
| Scottish intermediate tax rate | 21% on annual earnings from £25,159 to £43,430 |
| Scottish higher tax rate | 41% on annual earnings from £43,431 to £150,000 |
| Scottish top tax rate | 46% on annual earnings above £150,000 |
Wales
| Employee Personal Allowance | £12,500.00 per year £240 per week £1,042 per month |
|---|---|
| Welsh basic tax rate | 20% on annual earnings above the PAYE tax threshold and up to £37,500 |
| Welsh higher tax rate | 40% on annual earnings from £37,501 to £150,000 |
| Welsh additional tax rate | 45% on annual earnings above £150,000 |
Tax Rates and National Insurance contributions for Self-employed
| Small profits threshold – Earnings below this threshold incur no NICs. | £6,475 |
| Class 2 NICs – for those earning above the Small profits threshold | £3.05 per week |
| Lower Profits Limit – Earnings up to this limit incur only Class 2 NICs. Over this limit incurs Class 4 NICs. | £9,500 |
Upper Profits Limit – Earnings up to this limit incur:
|
£50,000 |
Earnings above the Upper Profits Limit Any earnings above this limit incur:
|
Over £50,000 |
National Minimum Wage
Employees are entitled to a National Minimum Wage which is the minimum pay per hour and is as follows:
Rates applicable from April 1st, 2020 onwards.
| Category of Worker | Hourly rate |
|---|---|
| Aged 25 and above (national living wage rate) | £8.72 |
| Aged 21 to 24 inclusive | £8.20 |
| Aged 18 to 20 inclusive | £6.45 |
| Aged under 18 (but above compulsory school leaving age | £4.55 |
| Apprentices aged under 19 | £4.15 |
| Apprentices aged 19 and over, but in the first year of their apprenticeship | £4.15 |
Statutory Maternity, Paternity, Adoption, Shared Parental and Parental Bereavement Pay
Employees are entitled to SMP, SPP, ShPP, SAP or SPBP as follows:
|
|
| Statutory Paternity Pay (SPP) – weekly rate | £151.20 or 90% of the employee’s average weekly earnings, whichever is lower |
|
|
| Statutory Shared Parental Pay (ShPP) – weekly rate | £151.20 or 90% of the employee’s average weekly earnings, whichever is lower |
| Statutory Parental Bereavement Pay (SPBP) – weekly rate (applies from 6 April 2020) | £151.20 or 90% of the employee’s average weekly earnings, whichever is lower |
Statutory Sick Pay (SSP)
The SSP rate for all eligible employees has been increased to £95.85 per week for the year 2020/21
Mileage Allowances
Employees using their own vehicle for business journeys can claim mileage allowances from their employer as follows:
| Car / van | £0.45 for first 10,000 business miles and £0.25 for each mile over 10,000 |
| Motorcycle | £0.24 for all business miles |
| Bicycle | £0.20 for all business mile |
